Fintech firm PayPal has applied to become a bank in the U.S., seeking to capitalize on President Donald Trump’s more permissive approach to financial industry oversight. The company said on Monday that it submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to create PayPal Bank. The company stated that becoming a bank would help it increase its lending to small businesses.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” said chief executive Alex Chriss. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunities across the US.”
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PayPal, which was founded in 1998 by prominent tech executives including Elon Musk and Peter Thiel, had extended more than $30 billion in loans and capital to more than 420,000 business customers globally since 2013, according to the company, adding that securing a banking license would allow it to reduce its reliance on third parties and provide its customers with FDIC insurance on their deposits.
Multiple crypto companies and neobanks recently sought to take advantage of the Trump administration’s more permissive approach to non-traditional financial companies entering the regulated banking sector.
Companies like Brazilian digital lender Nubank and crypto exchange Coinbase have already applied for banking charters this year. The Office of the Comptroller of the Currency last week said it had granted conditional approval for banking to Ripple and Fidelity Digital Assets for a banking charter.
In October, the U.S. regulators also approved the launch of Erebor, a bank backed by a group of high-profile tech billionaires with ties to the Trump administration, seeking to replace Silicon Valley Bank which had collapsed earlier.
“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” said Comptroller of the Currency Jonathan Gould in a statement last week. “They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”
PayPal already has a banking license in Luxembourg. The company has already selected the former chief executive of Toyota’s financing business, Mara McNeill, to head the regulated entity if it were to be approved.
Previously, PayPal had signed a deal with OpenAI to have its wallet embedded into ChatGPT. This facility allows users to pay for items using the AI tool. This agreement means that starting next year, PayPal users will be able to purchase items through ChatGPT, and merchants will be able to use it for selling.